Last year’s acquisition of Canada Life Financial Corp. and solid performance from existing divisions helped boost Great-West Lifeco Inc. earnings by more than 53% in the second quarter, the company said Wednesday.

The insurance giant said net income for the three months ended June 30, including restructuring costs from the CLC acquisition, was $401 million (89.8¢ a common share), up 53.6% from $261 million (71.5¢) a year ago. Before restructing costs, net income for the quarter was $407 million (91.2¢).

For the six months net income, after restructuring costs, was $777 million ($1.74 per share) vs $514 million ($1.77) for 2003, an increase of 51%.

Total revenue from premiums and deposits in the second quarter jumped 47% to $8.8 billion from $6 billion; for the six months, revenues were up 46% to $18.5 billion.

Total assets under administration, meanwhile, jumped 80% to $167.3 billion, as of June 30, up from $92.8 billion a year earlier. With the acquisition of Canada Life, which closed last July, Great-West holdings now include Great-West Life Assurance Co., London Life Insurance Co. and Great-West Life & Annuity Insurance Co.

Great-West said the inclusion of Canada Life was felt particularly in its European division. Six-month net earnings for that segment jumped to $153 milllion vs $23 million a year ago, while total premiums and deposits increased $2.7 billion to $4.8 billion.

“[Great-West] experienced solid growth overall in the second quarter, with strong operating results in all major business segments, a substantial increase in assets under administration, and significant growth in net income attributable to common shareholders,” the company said in a release.

It also announced a quarterly dividend of 36.25¢ per common share, an increase of 4¢, payable Sept. 30. In addition, the company said it plans a two-for-one stock split.

Meanwhile, Standard & Poor’s Ratings Services affirmed most of its ratings on Great-West and its subsidiaries, but it raised its long-term counterparty credit rating on Canada Life .

The ratings on Canada Life Financial have been equalized with those on Great-West because, S&P says, it does not see any structural subordination between these holding companies under the current ownership structure.

“The financial strength ratings on Lifeco’s subsidiaries reflect the companies’ continued success in building and maintaining leading business positions domestically and in the U.S., very strong and consistent operating performance, and the consolidated group’s improving capital
adequacy,” said S&P credit analyst Donald Chu.

These strengths are partially offset by increased level of financial leverage at all levels of the Power Financial Corp. group; the recent use of double leverage by Great-West; the undercapitalization of Great-West Life Assurance due primarily to the $5.1 billion in goodwill and identified intangibles; and the integration and operational risk that continues to be associated with the Canada Life acquisition.

S&P said it continues to believe that the Canada Life integration is proceeding as planned.

Nevertheless, S&P’s outlook for Great-West and its subsidiaries is negative. The negative outlook reflects the reduced margin of tolerance should Great West Life Assurance earnings, financial leverage, and capitalization not remain on a favorable trajectory over the next one to two years, it says.